free cash flow

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Free Cash Flow

A measure of a company's ability to generate the cash flow necessary to maintain operations. There is more than one way to calculate free cash flow, but perhaps the simplest is to subtract a company's capital expenditures from its cash flow from operations. Some analysts believe that free cash flow is more important than other measures of financial health because it measures how much cash a company has and can make. This differs from other measures, which are sometimes accused of using both legitimate and illegitimate forms of accounting to make a company look healthier than it really is.

free cash flow

The cash flow that remains after taking into account all cash flows including fixed-asset acquisitions, asset sales, and working-capital expenditures. The definition of free cash flow varies depending on the purpose of the analysis for which it is being used.

Free cash flow.

A business's free cash flow statement may differ significantly from its cash flow statement. The cash flow statement generally represents earnings before interest, taxes, depreciation, and amortization (EBITDA).

Cash flow and EBITDA focus specifically on the profitability of the company's actual business operations, independent of outside factors such as debt and taxes. Free cash flow, however, reports the net movement of cash in and out of the company.

To determine free cash flow, equity analysts add up all the company's incoming cash and then subtract cash that the company is obligated to pay out, which includes all expenses, debt service, preferred dividends, and capital expenditures. The result tells you how much cash was left over or how short of cash the company was at the end of the fiscal period.

References in periodicals archive ?
We expect the company to generate strong cash flows with mid- to high single-digit FCF margin over the medium term.
Due to the flexibility of the FCF it allows different solutions for the client such as Explosion venting, flameless explosion venting or Explosion Suppression systems together with other associated equipment depending on the client's needs and local regulations.
DES is also supported by the FCF through its Adopt a School Program.
But Ancheta said the early shipments of gold were derived from test runs of FCF Minerals facilities before their full operations.
Brilliant blue FCF and sunset yellow FCFare used as food dyes in many different products including juices, ice cream, yogurt, jelly and candy [7].
With the close of FCF III, Forbion now manages well over EUR 700 million.
The second component of FCF is the additional investments in operating working capital ([DELTA][NOWC.
In 2011, [Education Minister] Huw Lewis and many other Labour candidates made a promise to me and other student leaders in Wales to protect the FCF throughout the fourth Assembly.
The FCF will be retained in the FE sector for the coming 2014-15 academic year but the Welsh Government wrote to universities this week to inform them of their decision to pull funding for HE.
com)-- Robert Hindemarsh, Chief Investment Officer of The FCF Group recently reported, “The usual disparity seen between our institutional and retail trades placed by private investors has moved.
Despite not having completed its investment program, the company remains FCF positive, while other generators are set to reach this point only in 2012-13.